A meta-heuristic approach for optimizing ordering and inventory control of two-echelon supply systems

Abstract

This paper concerns with the material ordering and inventory control in supply chains that consist of one manufacturer and multiple retailers under uncertain end customer demand and delivery lead time. The problem is investigated under three controlling policies: the traditionally centralized controlling policy under the manufacturer's perspective, the entire chain's perspective, and the coordinating controlling policy with an incentive scheme. By using Genetic Algorithm (GA) to solve the problems, we show that the coordinating controlling policy with an incentive scheme can outperform the others while creating a win-win situation.